Nearly half of top pension funds gambling on climate change

Almost half the world’s top pension funds are taking an ill-advised gamble on climate change, according to a financial thinktank.

The Asset Owners Disclosure Project’s (AODP) annual index of 500 of the largest global asset owners found that 232 of them had done little or nothing to protect their investments from the financial upheavals predicted due to climate change.

Financial experts, including the president of the World Bank and the governor of the Bank of England, have warned that fossil fuel assets are risky investments because their reserves of coal, oil and gas cannot be burned if the world is to avoid the most extreme impacts of climate change.

A landmark report in 2013 showed that if these assets became “stranded” – suffering large-scale loss of value – it could destabilise global financial markets.

Julian Poulter, the CEO of AODP, said around 50% of assets held by the funds were exposed to some kind of climate risk, but many pension funds and other foundations are ignoring that risk and “betting on business as usual”.

“They’re betting around 20-1 that either the fossil fuel company influence will last forever or that their fund managers will bail them out of a crisis – but that didn’t work too well during the last systemic crisis did it?” he said.